Covid-19 and Portugal: Tax Measures Update

published on April 2020 | reading time approx. 2,5 minutes

The following new tax measures have been implemented in Portugal, through Decree-Law no. 10-F/2020 of 26 March and Ministerial Orders of the Secretary of State for Tax Affairs no. 121/2020 – XXII and 122/2020 – XXII, both of 24 March, and no. 129/2020-XXII, of March 27:

In the second quarter of 2020, VAT and withholding taxes (CIT and PIT) may be paid: immediately or in 3 or 6 monthly instalments without interest, by taxpayers with a turnover of up to 10 million euro, calculated in 2018, or who have started business since 1 January 2019.
 
For other taxpayers, payment may be made through instalments if there has been a reduction in the invoicing communicated through the tax authorities eportal of at least 20 per cent in the average of the three months preceding the month in which this obligation must be met, compared to the same period of the previous year.
 
These instalment payments do not require the granting of a guarantee.
 
The periodical VAT returns, referring to the period of February 2020, to be submitted within the legal deadline, may be calculated on the basis of the data contained in the E-Invoice system, and the regularization of the situation shall be made through the submission of a declaration of substitution provided that this replacement and respective payment/accuracy occurs during the month of July 2020, based on the entire supporting documentation, without any additions or penalties.
 
The simplification in the compliance with this reporting obligation applies to the taxpayers:

• with a turnover up to 10 million euro with reference for the year 2019;
• who started activity on or after January 2020; or
• which restarted activity on or after that date and did not achieve turnover in 2019.

The invoices in PDF format, during the months of April, May and June, will be considered electronic invoices for all purposes provided for in tax legislation.
 
It is determined the suspension of tax execution proceedings until 30 June 2020, which are in progress or will be initiated by the Tax and Customs Authority.
 
The fair impediment regime is applicable within the fulfilment of any tax obligations, including those that have to be fulfilled in the context of administrative procedures related to the assessment of taxes, in relation to taxpayers or certified accountants, in situations of infection or prophylactic isolation declared or determined by a health authority, being required the respective proof by means of a declaration issued by a health authority. 
 
The situations in which a health fence is set and therefore preventing taxpayers or certified accountants from moving to and from the areas covered by the fence, provided that they have their tax or professional domicile in the areas concerned, are also considered to be sufficient conditions for the application of the fair impediment figure.
 
It is determined the application of the judicial vacation regime to (i) the tax deadlines that run in favor of taxpayers and that relate with acts of judicial claims, administrative complaints, hierarchical appeal, or other procedures of the same nature, as well as to deadlines for the practice of acts within the scope of the same tax procedures; (ii) the instalment plans running currently before the Tax and Customs Authority, without prejudice to the fact that they may continue to be punctually fulfilled.
 
The assessment and payment of Stamp Duty for the months of January, February and March 2020 may be complied with by 20 April 2020 without any increase or penalty.
 

Until 20 January 2021 taxpayers may offset the tax assessed and paid up to the subsequent assessments and supplies, if after the tax assessment the transaction is canceled or its taxable amount reduced as a result of error or invalidity, including material or calculation errors.
 

The obligation to settle and pay Stamp Duty for the months of 2020 can be fulfilled through the settlement procedure and model that was in effect until 31 December 2019, i.e., by completing and submitting the multi-tax guide provided in Ordinance No. 0523/2003, of 4 July.
 

The new Monthly Stamp Duty Declaration (DMIS) is to be applied only with reference to transactions and facts subject to Stamp Duty carried out as of 1 January 2021.
 
Exemption from VAT on gratuitous transfers of goods to the State, to private charitable institutions and to non-profit ONGs, for subsequent disposal to needy persons, even if they remain in the property of those bodies, being the VAT paid in their acquisition deductible.
 

It is clarified that needy people are also considered those who are receiving health care in the current pandemic context, who are characterized as victims of disasters.